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Aust share market closes 1.3% higher

Kylie Williams

The Australian market closed higher after news that Australian retailers recorded their strongest January sales growth in six years led to gains for discretionary retail stocks.

Retail spending rose 0.9 per cent, seasonally adjusted, in January reversing three months of decline in the sector, the Australian Bureau of Statistics said.

CMC Markets chief market analyst Michael McCarthy said while the announcement led to gains for discretionary retailers, the supermarket giants' shares were rising before the better than expected sales figures were released.

"That may be because of the lobbying that's going on in Canberra and the case that Woolworths has made about the competition from Aldi," he said.

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"It may have got some investors thinking it's time to get further exposure there."

The Australian Competition and Consumer Commission is investigating allegations of predatory behaviour in the supermarket industry.

Woolworths shares were up $1.07, or 3.14 per cent, to $35.15, while shares in Wesfarmers, which owns Coles, lifted $1.11, or 2.7 per cent to $42.20.

David Jones shares surged 10 cents, or 3.48 per cent, to $2.97, Myer gained seven cents, or 2.52 per cent, to $2.85 and Harvey Norman added six cents, or 2.34 per cent, to $2.62.

In other economic news, the Reserve Bank of Australia kept the cash rate at three per cent at its March board meeting, citing a better local and overseas economic outlook.

Australia's current account deficit shrank by two per cent to $14.678 billion in the December quarter, thanks to a rise in mining exports.